The core of the Managed IT Services pricing structure is a “flat monthly fee”. Let’s stop here briefly because in many cases, the vendor you’re talking to will include additional language after the words “flat monthly fee”, things such as “all-inclusive”, “unlimited”, etc. The reason this is the main component of MSP (Managed Services Provider) pricing is that firms like ours, as businesses, are looking for recurring revenue, as are many of our clients in their business. Not all of us are though, many firms are happy doing large or small projects and building a practice that way. However if a firm says that they charge a flat monthly fee, the two main questions that should follow are:
1. What is this fee based on? We derive our monthly fee by using an a la carte price sheet (see below) which lists out all of the items present in a client’s IT environment (e.g. the number of users, applications, severs, network and backup appliances, etc.) along with a cost for supporting each item multiplied by the count for each, see below.
Once we have the total, we can divide that by the number of users to arrive at the per user/per month fee. We only do this to give clients the ability to compare our pricing to other firms, some of whom will quote MSP pricing this way, by using a blanket statement: “we charge $150 per user per month”. They will often quote this number without having done any discovery about a client’s environment, and how they’re able to do this is a mystery all it’s own. No two clients are exactly the same, while one client may have 25 users and a couple of servers and may warrant a $150 per user per month fee, another 25 user firm that is all cloud based and has no servers, should be at a lower fee.
2. What is included in the flat monthly fee and what is not? The most common approach to this is to include unlimited support for all existing deployed users and assets and any substantial moves, adds or changes to the environment may require an additional fee, charged on a time and materials (T&M) basis. At least this is our approach and it has served our clients and us well. Typically if something falls outside the “existing deployed users and assets” and requires several hours of work, we will provide a written scope and get approval from the client before commencing. For things that are fairly quick, we will typically use our discretion and not charge for it/include it as part of the monthly flat fee. As we say, it often takes more time to kick off the workflow to generate the invoice than it does to do the small thing…
Keep an eye out for more on “Project Work” in a separate article in the series on this topic.
If this is an area that you have more questions, feel free to contact us or request a free discovery session.
